, compose one well-written paragraph that shows how you can apply the circular flow of income to the questions you just answered. In your writing, be sure to use proper economic terminology, such as the labels in the circular flow model.
As consumer spending increased, less savings were placed in the financial sector. This resulted in reduced business investment. The government also spent less, meaning it injected less money into the economy. There was a trade deficit because imports were greater than exports. This means there was more leakage through imports than there was money injected through exports.
As consumer spending increased, less savings were placed in the financial sector. This resulted in reduced business investment. The government also spent less, meaning it injected less money into the economy. There was a trade deficit because imports were greater than exports. This means there was more leakage through imports than there was money injected through exports.
